Following its acquisition of Jaypee Infratech Ltd (JIL) on June 4, 2024, Suraksha Group has outlined a resolution plan to address JIL's debt and revive its projects. The plan includes allocating 2,552 acres of land to lenders, injecting INR 125 crore in equity, and securing INR 3,000 crore in loans to complete 20,000 residential units. With an estimated need of INR 6,500-7,000 crore to finish 160 towers, Suraksha aims to restart construction by October 2024. Governance changes and a payment of INR 1,334 crore to YEIDA are also part of the strategy, reflecting broader real estate sector challenges.
Suraksha Group has taken significant steps following its acquisition of Jaypee Infratech Ltd (JIL) through the insolvency process. With control established on June 4, 2024, after the National Company Law Appellate Tribunal (NCLAT) approved its bid, Suraksha Group has laid out a comprehensive resolution plan aimed at tackling JIL's debts and reviving its stalled projects.
Under the resolution plan, Suraksha has identified a total of 2,552 acres of land to be allocated to JIL's lenders as part of a settlement for outstanding dues. This includes 2,372 acres for general lenders and 180 acres specifically earmarked for ICICI Bank. To facilitate this process, the group has engaged CBRE, a leading real estate consultancy, to assist in the identification and valuation of these land parcels. This strategy is crucial as JIL's original land holdings span approximately 6,250 acres in the Delhi-NCR region.
In addition to land allocation, Suraksha has committed significant financial resources to revitalize JIL. Over the past three months, it has injected INR 125 crore in equity and another INR 125 crore in debt. Furthermore, a loan facility of INR 3,000 crore has been secured to help complete about 20,000 unfinished residential units across various locations in Delhi-NCR. Currently, JIL holds around INR 1,000 crore in cash, derived from its real estate projects and toll revenues from the Yamuna Expressway, bringing the total available liquidity to approximately INR 1,250 crore.
The challenge ahead is substantial. Suraksha estimates that it will require between INR 6,500 crore and INR 7,000 crore to complete the construction of nearly 160 residential towers. Of these, work had previously commenced on only 62 towers before Suraksha took control, while the remaining 97 towers had been dormant. In a bid to expedite construction, contracts for 41 of the stalled towers have already been awarded, with plans to soon initiate orders for the remaining projects. The goal is to kickstart construction activities fully by October 2024.
The governance of Jaypee Infratech has also seen significant changes. Sudhir Valia, the promoter of Suraksha Group, has been appointed as a Non-Executive Director, overseeing strategic decisions, while Aalok Champak Dave and Usha Anil Kadam have joined as Executive Director and Independent Director, respectively. Their leadership will be vital as JIL navigates its way out of insolvency while aiming to safeguard the interests of both its creditors and homebuyers.
Part of the resolution plan includes an additional payment of INR 1,334 crore to the Yamuna Expressway Industrial Development Authority (YEIDA) for farmers' compensation, a point of contention as YEIDA has appealed to the Supreme Court for further compensation. This legal aspect may influence the pace of implementation of the resolution plan.
JIL's troubles reflect broader challenges within the Indian real estate market, particularly concerning stalled projects and regulatory issues. With the resolution process spanning years-initiated back in August 2017-Suraksha Group's successful acquisition brings a mixture of hope and skepticism. Stakeholders will be watching closely to see if the new management can deliver on its promises and restore confidence in Jaypee's ventures.
Suraksha Group's strategic move not only affects the immediate stakeholders involved but also sets a precedent for future insolvency cases in the real estate sector. Maintaining transparency, adhering to timelines, and effectively managing resources will be key factors determining JIL's recovery and the preservation of homebuyers' interests in the long term.
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